Phillip Wartell, Esq. Rose & Rose 291 Broadway, 13th Floor New York, NY 10007 Attorney for Respondent: Evan Hasbrook, Esq. The Legal Aid Society 2090 7th Avenue, 3rd Floor New York, NY 10027
Phillip Wartell, Esq. Rose & Rose 291 Broadway, 13th Floor New York, NY 10007 Attorney for Respondent: Evan Hasbrook, Esq. The Legal Aid Society 2090 7th Avenue, 3rd Floor New York, NY 10027 Heela D. Capell, J.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of respondent's motion to amend the answer and petitioner's cross-motion for summary judgment.
Notice of Motion & Affidavits Annexed 1 Notice of Cross-Motion and Affidavits Annexed 2 Answering Affidavits Replying Affidavits 3, 5 Exhibits Memorandum of law 4
After submission of the foregoing cited papers, respondent's motion and petitioner's cross-motion are consolidated for disposition purposes and decided jointly as follows:
West 152 Associates, LP ("Petitioner") commenced this non-payment proceeding against Malang Gassama ("Respondent") seeking rent arrears for the apartment located at 614 West 152nd Street, Apt. Bsmt. 1, New York, NY 10031 ("Premises"). Petitioner commenced this proceeding by notice of petition and petition dated July 8, 2019. The petition demands $37,318.92 in "rent and additional rent" from Respondent for the period of August 2017 through July 2019 as follows: $1,130.00 from August 2017; $1,550.00 per month from December 2017 through October 2018; and $1,609.88 per month from November 2018 through July 2019. Respondent initially filed an answer to the proceeding while unrepresented ("Unrepresented Answer") and subsequently obtained counsel through the Universal Access to Counsel Program in this Part. The Unrepresented Answer contains the defenses that the monthly rent demanded in the petition is neither the legal amount nor the amount on the lease, that there are conditions at the Premises in need of repair, and a general denial.
Respondent's counsel filed the instant motion to amend the Unrepresented Answer to include a new defense and counterclaim, in addition to the defenses raised in the Unrepresented Answer. Petitioner filed a cross-motion for summary judgment on its prima facie case. In its motion Petitioner also seeks an abatement hearing on Respondent's breach of warranty of habitability claims but requests that the court limit the hearing to Respondent's claims from April 2017 forward.
Prior Litigation History
Petitioner previously commenced at least four summary nonpayment proceedings against Respondent in which Respondent was not represented by counsel. Three of the prior nonpayment proceedings, Index Number L & T 59337/15, Index Number L & T 69519/16 and Index Number L & T 58161/17, were settled by stipulations wherein Respondent agreed to pay arrears to Petitioner. In two of these three proceedings, in addition to Respondent agreeing to pay the arrears, Petitioner agreed to make repairs at the Premises. The fourth nonpayment proceeding, under Index Number L & T 77046/17 ("Previous Nonpayment"), was dismissed after trial in a decision and order by the Honorable Jack Stoller dated September 24, 2018 ("Trial Decision") (Resp Ex. D, West 152 Assoc. L.P. v Gassama, Civ Ct NY County, Sept. 24, 2018, Stoller, J., index No. 77046/19). In the Trial Decision, the court held that Petitioner failed to prove its prima facie case because it did not produce a lease agreement between the parties wherein Respondent agreed to pay the rent sought in the petition. Rather, the court found that the documents Petitioner introduced into evidence entitled "License Agreements," each of which expired by their own terms, were not intended by the parties to be leases. The first "License Agreement" commenced on November 15, 2013 and expired on November 30, 2014. The three subsequent "License Agreements" were for one year terms which commenced on December 1, 2014, December 1, 2015, and December 1, 2016, respectively. It was undisputed that the Respondent never signed a rent stabilized lease for the Premises nor any agreement in which he agreed to pay the amount sought in the petition other than the expired "License Agreements." Accordingly, the court dismissed the Previous Nonpayment. (Id.)
Prior to the trial in the Previous Nonpayment, Respondent filed an overcharge claim with DHCR. In the claim, Respondent asserted that the rent amount of $1,700.00, which Petitioner charged and collected on September 5, 2017, constituted a rent overcharge. In the Trial Decision, the court dismissed the Previous Nonpayment without prejudice, "not only to Respondent's cause of action at DHCR, but without prejudice to Petitioner's defenses thereto and furthermore without prejudice to a future cause of action for nonpayment of rent against Respondent if DHCR makes a determination that gives rise to a cause of action for nonpayment of rent" (Gassama, index No. 77046/19).
On June 10, 2019, DHCR issued an order dismissing Respondent's overcharge complaint ("DHCR Order"). The DHCR Order provided, "[respondent] moved into the subject apartment on November 13, 2013 with a written lease of one year with a start date of November 15, 2013 and an expiration date of November 30, 2014 with a legal regulated rent of $1,550.00." DHCR held that "the legal regulated rent [for the Premises] is $1,609.88 beginning November 1, 2018" and that based on the legal regulated rent amounts established by the DHCR Order, "[respondent] has rent arrears in the amount of over $30,000.00." Petitioner commenced the instant non-payment proceeding a month after DHCR issued its order. Respondent filed a PAR of the DHCR complaint which is currently pending before DHCR.
Amendment of the Answer
In the motion in chief, Respondent seeks to amend the Unrepresented Answer to include the defense that the Petitioner is barred by the doctrine of collateral estoppel from re-litigating issues in this proceeding that were decided after trial in the Previous Nonpayment, a counterclaim for damages based upon breach of the warranty of habitability, from November 2013 to the present, and an objection in point of law that the rent demand is fatally defective ("Proposed Amended Answer"). CPLR 3025(b) provides that motions to amend pleadings shall be freely granted absent prejudice or unfair surprise to the opposing party. Moreover, whether to grant leave to amend a pleading is within the sound discretion of the court so far as such amendment is not palpably lacking in merit (see Davis v South Nassau Community Hosp., 26 NY3d 563, 580 ; see also Kimso Apts., LLC v Gandhi, 24 NY3d 403 ).
Here, the first two defenses in the Proposed Amended Answer were interposed in the Unrepresented Answer, to wit, that there is no lease agreement between the parties that permits Petitioner to collect the rent sought in the petition, and breach of the warranty of habitability. Respondent's proposed counterclaim for damages stemming from his breach of the warranty of habitability defense is directly related to his previously interposed defense. Moreover, the proposed defense of collateral estoppel refers to the Previous Nonpayment, which was litigated by both parties last year. Petitioner has failed to demonstrate that these defenses palpably lack merit or that amending the answer would constitute unfair surprise. Leave to amend a pleading is also freely granted, particularly once a litigant obtains the assistance of counsel (Harlem Restoration Project v Alexander, NYLJ, July 5, 1995, at 30 col 5 [Civ Ct, NY County 1995]). Accordingly, the motion is granted and the Proposed Amended Answer is deemed served and filed nunc pro tunc.
In its cross-motion, Petitioner seeks summary judgment on its prima facie case. In support of its cross-motion, Petitioner attaches a certified deed for the building dated September 25, 1996 reflecting Petitioner as owner of the subject building (Pet Ex. B); a certified Multiple Dwelling Registration for the building filed with HPD (Pet Ex. C); a certified rent registration for the Premises filed with DHCR (Pet Ex. D); a "License Agreement" between the parties dated November 6, 2013 for a term commencing November 15, 2013 and expiring on November 30, 2014 (Pet Ex. E); the Notice of Petition and Petition filed in this proceeding (Pet Ex. F); and a rent history for the Premises prepared by Petitioner (Pet Ex. G). Petitioner also attaches to its cross-motion stipulations between the parties from the previous nonpayment proceedings (Pet Exs. H-K); an offer by Petitioner to Respondent of a rent stabilized lease for the Premises dated September 29, 2017 for a term commencing January 1, 2018 at a one year rental amount of $1,569.38 or a two year rental amount of $1,581.00 (Pet Ex. L); and the DHCR Order (Pet Ex. A).
The standard for summary judgment is clearly articulated in CPLR 3212(b) which provides that "the motion shall be granted if, upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party." The function of summary judgment is issue finding, not issue determination (Sillman v Twentieth Century Fox Film Corp., 3 NY2d 395, 404 ). Summary judgment should be granted when the moving party makes a prima facie showing of entitlement to judgment as a matter of law, giving sufficient evidence to eliminate any material issues of fact from the case (Winegrad v New York University Medical Center, 64 NY2d 851, 853 ). Moreover, "...when there is no genuine issue to be resolved at trial, the case should be summarily decided, and an unfounded reluctance to employ the remedy will only serve to swell the Trial Calendar and thus deny to other litigants the right to have their claims promptly adjudicated" (Andre v Pomeroy, 35 NY2d 361, 364 ).
Here, Petitioner has proven the following elements of its prima facie case: that it is the owner of the subject building (Pet Ex. B); that the building is properly registered with HPD (Pet Ex. C); that Petitioner registered rent for the Premises with DHCR (Pet Ex. D); and that the rent history for the Premises that Petitioner prepared reflects that Respondent owes $40,638.68 through September 2019 at a monthly rent amount of $1,609.88. However, the issue is whether Petitioner has established that it is entitled to collect this rent from Respondent in this summary nonpayment proceeding. In essence, both parties argue that the court should apply the doctrine of collateral estoppel to determine this issue in their favor.
In the Trial Decision, the court ruled that Petitioner could not maintain a nonpayment proceeding against Respondent for $1,550.00 because Petitioner failed to introduce into evidence a lease that obligated Respondent to pay the rent for the period sought in the petition (Gassama, index No. 77046/19). However, the court dismissed the proceeding without prejudice to Petitioner's claims if DHCR makes a determination that "gives rise to a cause of action for nonpayment of rent." (Id.) Petitioner argues that the DHCR Order established that Petitioner is entitled to collect rent arrears from the Respondent in this proceeding based upon DHCR's conclusion that Respondent moved into the Premises with a "written lease" and that the legal regulated rent for the Premises is $1,609.88 per month. Therefore, Petitioner maintains that this court is bound by the DHCR Order to find in Petitioner's favor. Respondent argues that the DHCR Order does not change the ultimate determination in the Trial Decision because the issue of whether there was a valid lease in effect between the parties was never actually litigated and necessarily decided. Accordingly, Respondent argues the court is bound by the doctrine of collateral estoppel to apply the ruling in the Trial Decision and decide that Petitioner cannot prove its prima facie case.
The court notes that this issue may have been raised on a motion to renew the Trial Decision (see Begler v Saltzman, 53 AD2d 578 [1st Dept 1976]). However, neither party addressed this issue in its papers and therefore this court will respect the parties' choice to litigate the issue in this forum (see Rosenblatt v St. George Health & Racquetball Assoc., LLC, 119 AD3d 45 [2d Dept 2014]). --------
When two inconsistent judgments are rendered in successive actions, the most recent judgment controls and determines the issue being litigated (Chenu v Board of Trs., 12 AD2d 422, 424 [1st Dept 1961], aff'd, 11 NY2d 688 ; Di Russo v Di Russo, 55 Misc 2d 839, 845 [Sup Ct, Nassau County 1968]). The reason for this rule is that the second tribunal's error in refusing recognition to the first judgment should be corrected by appeal in the second forum, not by collateral attack in yet a third forum (Byblos Bank Europe, S.A. v Sekerbank Turk Anonym Syrketi, 40 AD3d 497, 499 [1st Dept 2007], aff'd 10 NY3d 243 ). Additionally, the pendency of a tenant's PAR does not prevent a landlord from obtaining relief in a nonpayment proceeding (Rose v Kulitsa, 34 Misc 3d 130[A] [App Term 1st Dept 2011]), and a determination of DHCR is still entitled to preclusive effect even with the pendency of a PAR (Gardner v Division of Hous. & Community Renewal, 166 Misc 2d 290, 296-297 [Sup Ct, Bronx County 1995]).
However, for collateral estoppel to govern a legal issue, that issue must previously have been both actually litigated and necessarily decided (see Kaufman v Eli Lilly & Co., 65 NY2d 449, ; American Transit Ins. Co. v Hossain, 100 AD3d 421 [1st Dept 2012]). "The doctrine of collateral estoppel precludes a party from relitigating an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point . . . the party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action (Kaufman v Eli Lilly & Co., 65 NY2d 455-456 ). Moreover, the moving party has the burden of showing that the issue was identical and necessarily decided (Schwartz v Pub. Adm'r of County of Bronx, 24 NY2d 65, 73 ).
In the Previous Nonpayment, the issue of whether there was a lease in effect between the parties was an element of Petitioner's prima facie case as the petition stated that there was a written agreement between the parties in which Respondent agreed to pay the rent sought (Gassama, index No. 77046/19). It is undisputed that in the Previous Nonpayment the parties actually litigated this issue. While the facts have not changed between the date of trial in the Previous Nonpayment and today, Petitioner maintains that the DHCR's superseding order determined the issue in Petitioner's favor and that this court is bound by that order.
The issue before the DHCR was whether "the rent charged and collected by the owner on September 5, 2017 of $1700 constitutes an overcharge." In order to decide the issue, the rent administrator at DHCR ("RA") investigated and determined the relevant facts with respect to the legal regulated rent for the Premises and the rent charged to, and paid by, Respondent. The RA found that the base date for the complaint was September 5, 2013, and that the legal regulated rent on that date was $1550.00. By adding an MCI to the legal regulated rent on the base date, the RA calculated the rent as of November 1, 2018 at $1,609.88 per month. The DHCR Order explains that Petitioner charged Respondent a higher than permissible rent from December 1, 2014 through September 30, 2017, however, reimbursed Respondent the overcharge prior to the filing of the complaint. The RA did not find an overcharge since it was undisputed that Respondent had not tendered any rent to Petitioner since June 2017.
Importantly, it was not integral to the RA's ruling to determine whether there was a lease between the parties that entitled Petitioner to seek possession of the Premises from Respondent in a summary nonpayment proceeding (see Eli Lilly 65 NY2d 449). In the DHCR complaint the RA was required to calculate the legal regulated rent for the Premises and decide whether Petitioner overcharged Respondent. The DHCR Order references a "lease agreement" from 2013, in order to establish the legal regulated rent on the base date, and does not provide that a current lease exists between the parties. Because the issue of whether a valid lease agreement exists between the parties upon which Petitioner can predicate a summary nonpayment proceeding was not actually and necessarily decided in the DHCR Order, Respondent did not have "a fair opportunity to fully litigate [this] point." (see Eli Lilly 65 NY2d 449). Accordingly, the court is constrained by the doctrine of collateral estoppel to follow the holding in the Trial Decision and does not find the doctrine of collateral estoppel applies with respect to DHCR's Order.
The DHCR Order also does not "give rise" to this cause of action for nonpayment of rent as provided in the Trial Decision. Petitioner argues that because the RA found that the Respondent moved into the Premises pursuant to a lease, and that the Premises is subject to rent stabilization, then Petitioner has cause to commence a summary nonpayment proceeding. Petitioner maintains that after the original lease expired it was deemed to continue under the terms and conditions of the lease on a month-to-month basis, per the Rent Stabilization Code (9 NYCRR 2523.5 [c]; see e.g. NYSANDY12 CBP7 LLC v Negron, 64 Misc 3d 1238[A] [Civ Ct, Bronx County 2019]; FAV 45 LLC v McBain, 42 Misc 3d 1231[A] [Civ Ct, NY County 2014]) ("a landlord/tenant relationship continues after the expiration of a rent-stabilized lease on a month-to-month basis at the same rent as the parties had previously agreed to so long as the tenant remains in possession"). However, the unique facts in this proceeding preclude this court from applying that rule here.
First, the expired "License Agreement" Petitioner attaches in support of its motion was clearly not intended to function as a rent stabilized lease that continues to renew on its own terms (see Pet Ex. E). Rather, the opposite is true. The "License Agreement" expressly provides that it is merely a temporary "license" for Respondent to occupy the premises, which will "end fully and completely" at the end of its term, November 30, 2014. Importantly, the document states "this agreement and the rights of licensee shall not be deemed to be or construed as a month to month tenancy." (Id.) Accordingly, permitting Petitioner to deem the "License Agreement" a rent stabilized lease that renews itself on a month-to-month basis would be contrary to the express terms of the agreement (see Pald Enters v Gonzalez, 173 Misc 2d 681, 682 [App Term 2nd Dept 1997) ("rent stabilization is a lease-based regulatory scheme").
Moreover, Petitioner and Respondent entered into at least three other "License Agreements" between the date of the agreement attached to Petitioner's motion and this proceeding. (Gassama, index No. 77046/19). All three of those agreements expired by their own terms and contained rent amounts above the legal regulated rent. (Id.) Petitioner cannot simply pick and choose which agreement it seeks to deem renewed and under which terms it seeks to deem such an agreement renewed. There must be a meeting of the minds that agree to such terms, which is clearly absent here (see Matter of Jaroslow v Lehigh Val. R.R. Co., 23 NY2d 991 ; 265 Realty, LLC v Trec, 39 Misc 3d 150[A] [App Term 2nd Dept 2013]; 615 Nostrand Ave. Corp. v Roach, 15 Misc 3d 1 [App Term 2nd Dept 2006]; Pald Enters v Gonzalez, 173 Misc 2d 681). Accordingly, Petitioner has failed to establish that a lease agreement exists between the parties which gives rise to the instant summary nonpayment proceeding and its motion for summary judgment is denied (Jaroslow v Lehigh Val. R. Co., 23 NY2d 991). Searching the Record
On a motion for summary judgment both sides are required to assemble and lay bare their proof (Alfred E. Mann Living Trust v ETIRC Aviation S.a.r.l., 78 AD3d 137, 142 [1st Dept 2010]; Johnson v Phillips, 261 AD2d 269, 270 [1st Dept 1999]). CPLR 3212(b) additionally provides that "if it shall appear that any party other than the moving party is entitled to a summary judgment, the court may grant such judgment without the necessity of a cross-motion" (CPLR 3212[b]). Thus, under CPLR 3212(b) the court may, in its discretion, search the record and grant summary judgment to the non-moving party (Merritt Hill Vineyards, Inc. v Windy Hgts. Vineyard, Inc., 61 NY2d 106 ; Howell v Davis, 58 AD2d 852 [2d Dept 1977], affd 43 NY2d 874 ; Raine v Gleason, 194 AD2d 395, 396 [1st Dept 1993]). Given that the purpose of searching the record is judicial economy, granting summary judgment to a nonmoving party is consistent with CPLR 3212(b) (Quinones v Caballero, 10 Misc 3d 486, 494-495 [Sup Ct, Bronx County 2005]).
After searching the record, the court finds as a matter of law that Petitioner cannot establish its prima facie case and dismisses the petition in the interests of judicial economy (See CPLR 3212[b]; Quinones v Caballero, 10 Misc 3d 494-495). The dismissal is without prejudice to Petitioner's claims in a summary holdover proceeding or plenary action. Respondent's warranty of habitability counterclaim is severed, without prejudice. Absent an agreement to pay rent, there is no baseline amount of rent upon which to award an abatement (Gassama, index No. 77046/19, citing Park W. Mgt. Corp. v Mitchell, 47 NY2d 316, 329 ). Accordingly, Respondent's motion is granted and Petitioner's cross-motion is denied.
This constitutes the decision and order of the court. Dated: October 25, 2019 HON. HEELA D. CAPELL J.H.C. New York, New York